A Primer on Insurance Coverage for Live Events

When musical performers go on tour, they may likely expect that the venue where they are performing will have insurance to cover any liabilities that may arise in connection with their performance. Or, when the band purchases its own insurance, the band may believe it has taken the steps necessary to ensure that its insurance covers the types of potential liabilities that can, and often do, arise on the road. But what is often the case when a tragedy strikes is that the performers, venue, promoters, organizers and sponsors find that they may not be as well protected as they thought. Compounding the problem is the fact that touring performers and others involved in putting on the show are becoming more and more vulnerable to lawsuits by concertgoers due to injuries the concertgoers may sustain in connection with a live event. This is especially true for well-known bands, which earn a lot of money and garner media attention, making them and those associated with their
event prime targets for litigation.

Thus, even if a concert venue carries liability insurance to cover the scheduled performance, it is important for the musical group to carry its own liability and property insurance. And because cancellations, postponements, and the inability of the performer to take the stage also often occur due to unforeseen circumstances, those with a financial stake in the live event could also benefit greatly through the purchase of event cancellation and/or non-appearance insurance.

Recent Concert Incidents

Those involved with performing at, or putting on, live events are susceptible to many risks that could result in multi-million dollar losses. Indeed, lawsuits for alleged injuries suffered by concertgoers or property damage incurred by third parties can result from numerous types of dangers. For example, in 2011 and 2012, numerous stages collapsed. It started in July 2011, at the Ottawa Blues Festival, where Cheap Trick had been on stage for 20 minutes. Storm clouds quickly blew in and the band fled the stage just moments before the structure collapsed, injuring at least three people. See, 'At Least Five Injured As Stage Collapses at Ottawa Bluesfest,' Aux.tv, http://bit.ly/q6sDhA.

A month later, in Tulsa, OK, the Flaming Lips were set to play at the Brady District Block Party when another storm sent their massive lighting rig crashing down, resulting in reports of almost a million dollars in equipment damage. A few dates later, in August 2011, just before the award winning musical duo, Sugarland, was to play at the Indiana State Fair, the stage came down killing seven and injuring another 60. This was followed by a stage crumbling at the Pukkelpop Festival in Belgium, just a few days later, killing five and injuring about 140, due to a severe wind storm. Then in June 2012, the stage collapsed in Toronto a few hours before a sold-out Radiohead concert was scheduled to begin, killing one and injuring several more.

Moreover, stage collapses are not the only dangers faced at live event. Concertgoers may be injured during a performance at the hands of others in attendance. At a heavy metal festival in Sydney, Australia in 2001, a 16-year-old girl was crushed and later died of a heart attack after getting caught up in a mosh pit during Limp Bizkit's set. Her parents filed several wrongful death lawsuits, including one naming Limp Bizkit. This resulted in Limp Bizkit incurring substantial legal fees to defend itself, even though the court later held that it was the festival organizers that failed to do enough to prevent the moshing. Limp Bizkit's insurer denied any obligation to reimburse the band for these fees incurred in the wrongful death lawsuit and even sued the band to obtain
a judgment that it owed no duty.

What's more, there is always a risk that unforeseen circumstances will force cancellation, postponement or relocation of an event. For instance, Michael Jackson's This Is It sold-out concert was cancelled because of his untimely death less than three weeks before the tour was scheduled to begin. A cancelled or postponed concert due to the inability of the performer to take the stage may result in millions of dollars of losses for promoters, venues and other entities. In 2011, the rock group Kings of Leon canceled the 29 remaining shows on their U.S. tour, citing 'vocal issues and exhaustion' by the lead singer Caleb Followill. Rolling Stone reported that Lloyd's of London could have to pay as much as $15 million to promoters, venues and others who lost money due to the tour cancellation. See, 'Kings of Leon's Cancelled Tour Could Be Very Expensive,' http://bit.ly/o2KRsJ.

Types of Insurance

There are several types of insurance coverage available to protect against the risks posed by live events, including: commercial general liability insurance, which provides coverage for third-party bodily injury and property damage claims; property insurance, to protect against damage to the insured's own equipment and other property; event cancellation insurance, which provides coverage if a concert must be cancelled or postponed due to certain unforeseen circumstances; and non-appearance insurance, protecting those with a financial stake in the event when a performer is unable to perform due to injury or illness. However, there are a wide range of coverages and options available, so choosing the right one will require negotiations and a careful review of what is covered and not covered.

Commercial general liability (CGL) insurance typically provides broad coverage for a variety of liabilities commonly faced by insureds in connection with live events ' as this insurance covers claims of bodily injury, property damage, personal injury and advertising injury. Bodily injury coverage typically covers physical injuries that concertgoers or others at the show may suffer, including sickness, disease and death. Property damage coverage will cover damage to, and loss of use of, tangible property. Personal injury and advertising injury coverage provides coverage for a wide range of 'offenses,' including disparagement, libel and slander, invasion of the right of private occupancy, false arrest, detention or imprisonment, and wrongful entry or eviction.

One of the most valuable aspects of a CGL policy is that it confers on the insurer the duty to defend, or pay the defense costs for, lawsuits that are potentially covered. This can be a critical component in stage collapse lawsuits or lawsuits alleging injury or damage from other disasters, which can be extremely costly to litigate.

However, while the advantages to purchasing CGL coverage to protect against these types of lawsuits are many, it is important that the venue, promoters and performers ensure that their limits of liability are sufficient in case of a catastrophic loss. For example, in connection with the Great White concert fire in Rhode Island in 2003, which killed 100 and injured 180 more, according to The Boston Globe the club only had $1 million in liability policy limits, the foam insulation company had $5 million, the property owners had none, the city had $4 million, and the state had a cap of $100,000 per plaintiff. Therefore, the performers and event organizers need to make sure they purchase limits of liability based upon levels comparable to their risk exposure and taking into account affordability.

Moreover, the performers and event organizers should seek to ensure that the appropriate people have been named as 'additional insureds' on their CGL policies. For performers, this may mean checking to be sure that all members of the band and crew would be deemed insureds under the policy. Indeed, it may be the case that not all of the performers of the band are members or employees of the touring corporation that purchases the insurance. In such a situation, the business manager or insurance broker of the corporate insured should seek to ensure that these performers and crew members are included as additional insureds. Otherwise, this might allow an insurer to argue that certain members of the band or crew are not covered if they are sued.

Protecting Equipment on the Road

Performers may erroneously think that the venue's insurance will cover any damage to their equipment. However, while this is often the case, it will depend on the contracts negotiated with the venues. Thus, it also is vital that musical performers seek to ensure that the equipment that they take on the road is adequately protected through insurance, which can be accomplished through the purchase of a property insurance policy that provides coverage for musical, sound, lighting and other related equipment in the band's custody or control.

Moreover, when performers lease lighting, sound, video, stage or design equipment from third parties to take on the road, the equipment owner may request that it be named as a 'loss payee' or 'additional insured' on the performer's insurance for damage to the equipment or liability due to lawsuits against them. If possible, the performer should avoid taking on this liability. This may be a hotly negotiated issue but often the equipment owner will agree to cover its own equipment under its own insurance policy, which should be reflected in the rental agreement. Ideally, the agreement also will provide that the owner will hold the performer harmless against injury claims arising out of the use of the equipment, and agree to name the performer as an additional insured on the equipment owner's liability insurance policy. These issues are sometimes overlooked by insurance brokers or others when the applicable insurance policies are being purchased or renewed, which could result in disputes if the equipment is damaged or if the parties are named in lawsuits. Therefore, any contracts related to the lease of equipment should be carefully examined to ensure that the appropriate coverage is included and inquiries should be made to ensure
that such protections are instituted.

Protecting the Venue,
Promoters and Others if The Event Cancelled or Postponed

Despite all the efforts by the parties involved in putting on a live event, any scheduled event runs the risk that unforeseen circumstances will prevent it from going forward as planned. And while an event may need to be cancelled, postponed or relocated due to a number of reasons, the financial obligations related to it remain. A critical question for everyone involved in the planning and execution of almost any type of live event is whether adequate protections are in place to pay for loses should something interfere with the success of the event.

Event cancellation insurance is designed to provide protection to companies when events do not happen as planned and can compensate insureds for two types of loss ' the costs of putting on the event and the anticipated profits the event was expected to generate when an event is cancelled. The perils that can trigger this coverage include earthquakes, fires, floods, power failure, damage to the venue, interruption of a live broadcast for major breaking news, terrorism or threat of terrorism.

Protections Against Losses If a Performer Cannot Appear

For many concerts or other live events, financial success will depend on the attendance of a particular artist or performer. In October 2011, Adele's concert tour had to be cancelled before its conclusion on the advice of her doctor due to a reported 'hemorrhage in her vocal chords.' In such situations, non-appearance insurance may be an essential risk management tool for those involved in the planning and promotion of such live events.

Non-appearance policies generally provide coverage if illness, injury, death or unavoidable travel delay forces an insured performer to miss a scheduled event. Coverage may apply to things such as lost advertising or broadcasting revenue, lost ticket sales, amounts paid to reimburse those who already purchased tickets, and the costs to organize and market the event.

Non-appearance coverage can be purchased either as a stand-alone policy or as part of an event cancellation insurance policy. This type of coverage may protect against risks faced by anyone with a financial interest in the live event, including the event venue, its organizers, promoters, sponsors and merchandisers. The artist or performer also could purchase this insurance to seek to ensure they receive their appearance fee if illness or injury prevents them from appearing at an event. Moreover, those entitled to a percentage of the performer's appearance fee, such as an agent or business manager, may want to purchase non-appearance coverage to safeguard receiving their commission.

It is important to bear in mind, however, that insurers often will seek to limit the coverage in non-appearance policies through various exclusions. These types of policies typically will preclude coverage for non-appearances that stem from a performer's use of drugs or alcohol. Also, a non-appearance policy may preclude coverage for known, pre-existing medical conditions. Moreover, coverage for non-appearance due to 'exhaustion' likely may be excluded.

With all that can go wrong at concerts, it is getting increasingly more likely that when others are injured or property is damaged, the injured parties will look to the performers, the venue, and the event organizers and promoters for compensation. It is more important than ever that the band and all of those with a financial stake in an event make sure that they are aware of the various lines of insurance available to protect against the numerous risks posed. These insureds also need to carefully review and understand all applicable terms and conditions in the insurance they purchase, to ensure they maximize these valuable assets.

Susan Page White is a partner in Manatt Phelps & Phillips LLP's Insurance Recovery Practice Group, in its Los Angeles office. She has over 20 years of experience representing clients in complex insurance coverage matters, including bad faith. She also has represented and advised popular entertainers in insurance matters. She can be reached at [email protected].

When musical performers go on tour, they may likely expect that the venue where they are performing will have insurance to cover any liabilities that may arise in connection with their performance. Or, when the band purchases its own insurance, the band may believe it has taken the steps necessary to ensure that its insurance covers the types of potential liabilities that can, and often do, arise on the road. But what is often the case when a tragedy strikes is that the performers, venue, promoters, organizers and sponsors find that they may not be as well protected as they thought. Compounding the problem is the fact that touring performers and others involved in putting on the show are becoming more and more vulnerable to lawsuits by concertgoers due to injuries the concertgoers may sustain in connection with a live event. This is especially true for well-known bands, which earn a lot of money and garner media attention, making them and those associated with their
event prime targets for litigation.

Thus, even if a concert venue carries liability insurance to cover the scheduled performance, it is important for the musical group to carry its own liability and property insurance. And because cancellations, postponements, and the inability of the performer to take the stage also often occur due to unforeseen circumstances, those with a financial stake in the live event could also benefit greatly through the purchase of event cancellation and/or non-appearance insurance.

Recent Concert Incidents

Those involved with performing at, or putting on, live events are susceptible to many risks that could result in multi-million dollar losses. Indeed, lawsuits for alleged injuries suffered by concertgoers or property damage incurred by third parties can result from numerous types of dangers. For example, in 2011 and 2012, numerous stages collapsed. It started in July 2011, at the Ottawa Blues Festival, where Cheap Trick had been on stage for 20 minutes. Storm clouds quickly blew in and the band fled the stage just moments before the structure collapsed, injuring at least three people. See, 'At Least Five Injured As Stage Collapses at Ottawa Bluesfest,' Aux.tv, http://bit.ly/q6sDhA.

A month later, in Tulsa, OK, the Flaming Lips were set to play at the Brady District Block Party when another storm sent their massive lighting rig crashing down, resulting in reports of almost a million dollars in equipment damage. A few dates later, in August 2011, just before the award winning musical duo, Sugarland, was to play at the Indiana State Fair, the stage came down killing seven and injuring another 60. This was followed by a stage crumbling at the Pukkelpop Festival in Belgium, just a few days later, killing five and injuring about 140, due to a severe wind storm. Then in June 2012, the stage collapsed in Toronto a few hours before a sold-out Radiohead concert was scheduled to begin, killing one and injuring several more.

Moreover, stage collapses are not the only dangers faced at live event. Concertgoers may be injured during a performance at the hands of others in attendance. At a heavy metal festival in Sydney, Australia in 2001, a 16-year-old girl was crushed and later died of a heart attack after getting caught up in a mosh pit during Limp Bizkit's set. Her parents filed several wrongful death lawsuits, including one naming Limp Bizkit. This resulted in Limp Bizkit incurring substantial legal fees to defend itself, even though the court later held that it was the festival organizers that failed to do enough to prevent the moshing. Limp Bizkit's insurer denied any obligation to reimburse the band for these fees incurred in the wrongful death lawsuit and even sued the band to obtain
a judgment that it owed no duty.

What's more, there is always a risk that unforeseen circumstances will force cancellation, postponement or relocation of an event. For instance, Michael Jackson's This Is It sold-out concert was cancelled because of his untimely death less than three weeks before the tour was scheduled to begin. A cancelled or postponed concert due to the inability of the performer to take the stage may result in millions of dollars of losses for promoters, venues and other entities. In 2011, the rock group Kings of Leon canceled the 29 remaining shows on their U.S. tour, citing 'vocal issues and exhaustion' by the lead singer Caleb Followill. Rolling Stone reported that Lloyd's of London could have to pay as much as $15 million to promoters, venues and others who lost money due to the tour cancellation. See, 'Kings of Leon's Cancelled Tour Could Be Very Expensive,' http://bit.ly/o2KRsJ.

Types of Insurance

There are several types of insurance coverage available to protect against the risks posed by live events, including: commercial general liability insurance, which provides coverage for third-party bodily injury and property damage claims; property insurance, to protect against damage to the insured's own equipment and other property; event cancellation insurance, which provides coverage if a concert must be cancelled or postponed due to certain unforeseen circumstances; and non-appearance insurance, protecting those with a financial stake in the event when a performer is unable to perform due to injury or illness. However, there are a wide range of coverages and options available, so choosing the right one will require negotiations and a careful review of what is covered and not covered.

Commercial general liability (CGL) insurance typically provides broad coverage for a variety of liabilities commonly faced by insureds in connection with live events ' as this insurance covers claims of bodily injury, property damage, personal injury and advertising injury. Bodily injury coverage typically covers physical injuries that concertgoers or others at the show may suffer, including sickness, disease and death. Property damage coverage will cover damage to, and loss of use of, tangible property. Personal injury and advertising injury coverage provides coverage for a wide range of 'offenses,' including disparagement, libel and slander, invasion of the right of private occupancy, false arrest, detention or imprisonment, and wrongful entry or eviction.

One of the most valuable aspects of a CGL policy is that it confers on the insurer the duty to defend, or pay the defense costs for, lawsuits that are potentially covered. This can be a critical component in stage collapse lawsuits or lawsuits alleging injury or damage from other disasters, which can be extremely costly to litigate.

However, while the advantages to purchasing CGL coverage to protect against these types of lawsuits are many, it is important that the venue, promoters and performers ensure that their limits of liability are sufficient in case of a catastrophic loss. For example, in connection with the Great White concert fire in Rhode Island in 2003, which killed 100 and injured 180 more, according to The Boston Globe the club only had $1 million in liability policy limits, the foam insulation company had $5 million, the property owners had none, the city had $4 million, and the state had a cap of $100,000 per plaintiff. Therefore, the performers and event organizers need to make sure they purchase limits of liability based upon levels comparable to their risk exposure and taking into account affordability.

Moreover, the performers and event organizers should seek to ensure that the appropriate people have been named as 'additional insureds' on their CGL policies. For performers, this may mean checking to be sure that all members of the band and crew would be deemed insureds under the policy. Indeed, it may be the case that not all of the performers of the band are members or employees of the touring corporation that purchases the insurance. In such a situation, the business manager or insurance broker of the corporate insured should seek to ensure that these performers and crew members are included as additional insureds. Otherwise, this might allow an insurer to argue that certain members of the band or crew are not covered if they are sued.

Protecting Equipment on the Road

Performers may erroneously think that the venue's insurance will cover any damage to their equipment. However, while this is often the case, it will depend on the contracts negotiated with the venues. Thus, it also is vital that musical performers seek to ensure that the equipment that they take on the road is adequately protected through insurance, which can be accomplished through the purchase of a property insurance policy that provides coverage for musical, sound, lighting and other related equipment in the band's custody or control.

Moreover, when performers lease lighting, sound, video, stage or design equipment from third parties to take on the road, the equipment owner may request that it be named as a 'loss payee' or 'additional insured' on the performer's insurance for damage to the equipment or liability due to lawsuits against them. If possible, the performer should avoid taking on this liability. This may be a hotly negotiated issue but often the equipment owner will agree to cover its own equipment under its own insurance policy, which should be reflected in the rental agreement. Ideally, the agreement also will provide that the owner will hold the performer harmless against injury claims arising out of the use of the equipment, and agree to name the performer as an additional insured on the equipment owner's liability insurance policy. These issues are sometimes overlooked by insurance brokers or others when the applicable insurance policies are being purchased or renewed, which could result in disputes if the equipment is damaged or if the parties are named in lawsuits. Therefore, any contracts related to the lease of equipment should be carefully examined to ensure that the appropriate coverage is included and inquiries should be made to ensure
that such protections are instituted.

Protecting the Venue,
Promoters and Others if The Event Cancelled or Postponed

Despite all the efforts by the parties involved in putting on a live event, any scheduled event runs the risk that unforeseen circumstances will prevent it from going forward as planned. And while an event may need to be cancelled, postponed or relocated due to a number of reasons, the financial obligations related to it remain. A critical question for everyone involved in the planning and execution of almost any type of live event is whether adequate protections are in place to pay for loses should something interfere with the success of the event.

Event cancellation insurance is designed to provide protection to companies when events do not happen as planned and can compensate insureds for two types of loss ' the costs of putting on the event and the anticipated profits the event was expected to generate when an event is cancelled. The perils that can trigger this coverage include earthquakes, fires, floods, power failure, damage to the venue, interruption of a live broadcast for major breaking news, terrorism or threat of terrorism.

Protections Against Losses If a Performer Cannot Appear

For many concerts or other live events, financial success will depend on the attendance of a particular artist or performer. In October 2011, Adele's concert tour had to be cancelled before its conclusion on the advice of her doctor due to a reported 'hemorrhage in her vocal chords.' In such situations, non-appearance insurance may be an essential risk management tool for those involved in the planning and promotion of such live events.

Non-appearance policies generally provide coverage if illness, injury, death or unavoidable travel delay forces an insured performer to miss a scheduled event. Coverage may apply to things such as lost advertising or broadcasting revenue, lost ticket sales, amounts paid to reimburse those who already purchased tickets, and the costs to organize and market the event.

Non-appearance coverage can be purchased either as a stand-alone policy or as part of an event cancellation insurance policy. This type of coverage may protect against risks faced by anyone with a financial interest in the live event, including the event venue, its organizers, promoters, sponsors and merchandisers. The artist or performer also could purchase this insurance to seek to ensure they receive their appearance fee if illness or injury prevents them from appearing at an event. Moreover, those entitled to a percentage of the performer's appearance fee, such as an agent or business manager, may want to purchase non-appearance coverage to safeguard receiving their commission.

It is important to bear in mind, however, that insurers often will seek to limit the coverage in non-appearance policies through various exclusions. These types of policies typically will preclude coverage for non-appearances that stem from a performer's use of drugs or alcohol. Also, a non-appearance policy may preclude coverage for known, pre-existing medical conditions. Moreover, coverage for non-appearance due to 'exhaustion' likely may be excluded.

With all that can go wrong at concerts, it is getting increasingly more likely that when others are injured or property is damaged, the injured parties will look to the performers, the venue, and the event organizers and promoters for compensation. It is more important than ever that the band and all of those with a financial stake in an event make sure that they are aware of the various lines of insurance available to protect against the numerous risks posed. These insureds also need to carefully review and understand all applicable terms and conditions in the insurance they purchase, to ensure they maximize these valuable assets.

Susan Page White is a partner in Manatt Phelps & Phillips LLP's Insurance Recovery Practice Group, in its Los Angeles office. She has over 20 years of experience representing clients in complex insurance coverage matters, including bad faith. She also has represented and advised popular entertainers in insurance matters. She can be reached at [email protected].